NBER Working Paper No. 14404Issued in October 2008, Revised in December 2011NBER Program(s):Health Economics

This paper uses the National Comorbidity Survey - Replication to estimate the effects of recent psychiatric disorder on employment, hours worked, and earnings. We employ methods proposed in Altonji, Elder and Taber (2005) which use selection on observable traits to provide information regarding selection along unobservable factors. Among males, disorder is associated with reductions of 13-17 percentage points in labor force participation and employment, depending on the sample and the model. Among females, we find smaller, less consistent associations between disorder and labor force participation and employment. There are no effects of disorder on earnings or hours worked among employed individuals.